UPDATE: Since our “Nightline” report first aired, the Department of Public Safety concluded their investigation and recommended investigators Sam Richardson be charged with six counts of false swearing and Fred Andes be charged with one count of the same. All are felony charges in Arizona. No charges against Jack Ballentine were recommended, though all three have been placed on “alternative assignment.”

The Phoenix Fire Department's elite fire investigations unit, once lauded as the most successful arson squad in the country, is being investigated for allegations of misconduct.

The unit was making arrests in over half the Arizona city's arson cases, a soaring statistic in a field where arrests are notoriously hard to come by.

But now, Phoenix arson investigators Sam Richardson and Captain Fred Andes are accused of conducting shoddy investigations that led to questionable arrests, and the unit's director, Jack Ballentine, is accused of putting pressure on his team to make arrests before completing full investigations in order to get high case clearance numbers.

Two people have come forward claiming that the Phoenix fire investigations unit falsely accused them of arson.

It started back in 2007, when the department's fire chief hired a new squad director hoping to improve the unit's clearance rate. The unorthodox choice was Jack Ballentine, a highly-decorated police detective had no background in fire investigations.

"I've spent my whole career undercover, all the years doing that," Ballentine told ABC News in 2010. "And then, I've finished my career in homicide… and it seemed like a great challenge."

It was Ballentine's idea to take firemen from the department, including Richardson and Andes, and turn them into cops with guns and the power to arrest.

"We get these highly trained and skilled firefighters that go into the fire scene and can see it and read it," Ballentine said in 2010. "They've spent their whole life in it. It's like an old friend to them… then what we do is, we take them to the police academy. They go 18 weeks of school to get certified as a criminal investigator. That's huge."

When ABC News first interviewed Andes in 2010, he admitted the transition wasn't easy.

"We had no experience whatsoever. We had no idea what we were getting into," Andes said at the time. "We were pretty comfortable on a fire truck. We were pretty comfortable fighting a fire. Then all of a sudden, we're asked to investigate the fire, and we didn't have a clue."

Andes seemed to recognize the dangers of putting a firefighter into an investigator role.

"[Firefighters are] usually overly aggressive and we have to be careful because of safety concerns that we don't push our luck too much," Andes said in 2010. "So when you take firefighters and put them into a unit and make them investigators, we still have that same characteristic, we just don't know what to do with it."

To aid in investigations, Andes was given a new partner: Sadie, a specially trained arson dog, whose highly trained nose can detect tiny traces of accelerants, such as gasoline or lighter fluid, commonly used in arson cases. When the dog picks up the scent at a fire scene, she sits, or "alerts" and is given a food reward.

Between Ballentine's leadership and Sadie's nose, the Phoenix arson squad's case clearance skyrocketed. The squad went from making arrests in only 22 percent of cases in 2007 to making 65 percent in 2010, the highest in the country.

"My first couple years in here, I think we'd all know when somebody was making an arrest because it only happened a couple-three times a year," Andes told ABC News in 2010. "Now there's three or four a month and we don't even pay attention when somebody else has got one, we're working on our own cases."

The squad became the envy of fire departments across the country and but their shining record would soon be called into question.

Barbara Sloan, a mother of two working for an insurance company, lost her home in a fire on May 13, 2009. After the blaze was extinguished, Richardson and Andes were called to the scene.

In a video filmed by Richardson, the men are seen pointing out what they said were tell-tale signs of arson: The gas line to the stove was unplugged, an iron was found face down, and multiple drawers were found open, which investigators said helps provide air so the fire can burn faster.

Sadie the arson dog alerted to traces of accelerants at four spots throughout the house. A forensic accountant also revealed that Sloan was in massive debt and had been trying unsuccessfully to sell the house. But the crucial evidence came from Sadie, who detected accelerants at multiple locations around the house, making the case seem like a slam dunk.

Sloan was arrested and charged with arson, but released on bail. If convicted, she faced 29 years in prison.

But Sloan says she is innocent. She claims the drawers were open because she had recently fumigated the home and the gas line was disconnected because she was doing some remodeling.

In preparation for her trial, she sought help from Pat Andler, an independent certified fire investigator with more than 30 years of experience to examine the scene of the fire at her home.

"In my opinion it was not only … poorly done, everything associated with the investigation from day one… was not correct," Andler said.

Andler said all the physical evidence of the fire's origin leads to Sloan's car parked in the garage.

"By reviewing the 9-1-1 phone calls made by the first witnesses, they don't see fire anywhere else in the house but in the garage," he said. "The fire investigators here, Sam Richardson, never even entered the garage, never even inspected [or] opened up the hood of the vehicle that caused this fire."

Lab tests on the four spots where Sadie alerted to accelerants also came back negative.

The Sloan case wasn't the only one. Just six days prior, Richardson and Andes had been called to another house fire across town, and that case has also raised serious questions about their investigation tactics.

The suspect was Carl Caples, who had been renting the house. Caples was behind on his rent. Shortly before the fire broke out, Caples had been arguing with his roommate, who wouldn't let him into the house. Part of the investigators' suspicion, Caples said, was that he had set the house on fire to try to kill his roommate.

Again, Sadie the arson dog alerted to traces of accelerants at several locations and Richardson made up his mind on the scene that this was a case of arson.

Caples, a former sheriff's deputy and certified nurse, was arrested and interrogated by Richardson, who claimed to have videotape evidence of Caples at the scene of the crime. Turns out there was no videotape, though lying is a common police tactic to elicit confessions.

Sadie the arson dog did alert to accelerants, and that was enough for investigators to arrest Caples. Unable to afford bail, he sat in jail for 16 months. Prosecutors offered him a plea deal for one year probation, but Caples refused.

"I don't care if they gave me one second of probation," he said. "I was not signing no paperwork to admit guilt to a charge or to something that I didn't do."

Eventually, the case began to unravel. Pat Andler, who also worked on Caples' defense, told ABC News it's clear the fire started because of an electrical short in the attic of the rental home.

"Again, Sam Richardson got it wrong," Andler said. "He had the origin of the fire wrong. He had the causation of the fire wrong. He claimed that the fire started in the carport area. That's not the case at all."

But the case against Caples truly fell apart when the traces of accelerant Sadie detected came back from the lab negative. Prosecutors dropped the charges against Caples the day before his trial was set to begin. And it turns out the same thing happened in the Sloan case – Sadie found accelerants that the lab did not.

At one point in the video taken by Richardson while on scene at the Sloan fire, Sadie doesn't alert and Andes is heard on the video saying "just fake it for me, OK?"

"This should not have ever occurred," Andler said. "I don't understand why Fred Andes did that and Sam Richardson. I then questioned their ability. I desire to question their character. I certainly question their ethics."

The charges against Barbara Sloan were dropped by prosecutors "in the interest of justice." Sloan filed a civil suit and lost, but is appealing her verdict.

"I think they jumped to conclusions too quick," Sloan said. "I think the main investigator behind my fire did not take the time to properly investigate everything, and I believe he walked in with a very biased opinion and … shaped it to support his findings."

Arson dogs do often find trace amounts of accelerants that can't be confirmed by labs, because they're detecting trace elements too small to be meaningful; too small to help start a fire. According to the National Fire Protection Association, Sadie's alerts should not have been used as evidence to indict Sloan or Caples without confirmation from a lab.

Andes declined ABC News' repeated requests for an interview, citing an ongoing internal investigation that was launched in the aftermath of the Sloan case. Richardson also declined to comment.